Capps, who spoke to IndustryGamers this week in advance of his GDC Europe keynote (Cologne, Germany from August 15-17), made it very clear that he still sees 99 cent apps as a very serious threat to the health of the traditional games business. You might recall that Capps told us several months ago, "If there's anything that's killing us [in the traditional games business] it's dollar apps."

He hasn't changed his mindset on this one bit, and in fact, when we asked him if this means he's literally worried about cheap mobile games hurting Gears of War 3 this holiday, he answered, "Yeah, it does. If you think about what many people are doing... What game did I play today? What game did I play yesterday? If I have 30 minutes to game, what am I going to play? That [time] more and more gets taken up with mobile games."

"I'm more worried that you can get a really good 99 cent game that occupies you for hours and hours on end and how that impacts $60 SKUs [like Gears]."

Capps continued, "And I think that can be said for movies. I think the biggest competition for [XBLA title] Shadow Complex was Netflix – not Castle Crashers (great game) or Limbo, but if you fired up your dashboard right there if you already bought Netflix you have tons and tons of awesome content that's bite sized in 1.5 to 2 hour chunks. So that was our competition, getting mindshare in the dashboard, more than it was against the other games in the space.

"I'm more worried that you can get a really good 99 cent game that occupies you for hours and hours on end and how that impacts $60 SKUs [like Gears]. I'm not as worried about how it impacts Infinity Blade – I think there will always be room for a premium SKU on a mobile platform. And I think as more buyers [enter the mobile market], there will be more people who are willing to spend a bit more for quality. But I do worry about what it means for the next generation of console games. Are people really going to want to spend $60 on a game? I mean, we're spending tens of millions of dollars making those games that they want to play... it's not a sustainable business model. I'm not sure how it all ends up," he said candidly.

And as much as Capps fears 99 cent apps, he also acknowledges that pricing on the App Store is very difficult to determine.

"The arguments we had internally were about pricing and what we should set it at, because nobody really knows. It makes sense that we're still confused about how to price appropriately in that market. We see a much higher micro-transaction rate on Infinity Blade than most phone games do. But we charge $6 to get in, and that pre-qualifies players as probably the kind of consumer that would be willing to spend a bit more money if they want to accelerate their game experience," he said.

Here's the post chain that appeared before I switched things around for the thread split.

Originally Posted by Nirolak in 2010

Well, currently developers are piling on to browser/Chinese-style online games, social/Facebook games, iPhone/iPad/Android games, and 3DS games while also continuing their 360/PS3 games and their XBLA/PSN games, so pretty soon publishers should have a good idea what works out well for them and what doesn't on an individual basis.

I imagine a little while after the dust settles we will find out what platforms worked the best for publishers as a whole and we will see some of the publishers who decided to ignore those platforms go back and invest more heavily in them as well, the same way we saw a lot more publishers add multiplayer in console titles this generation.

Originally Posted by rpg_poser - Today

So, has the dust settled? Are smartphones the home console replacement? I don't own one. Has the quality of phone games regardless of OS gotten better in a year?
Those of you who are game devs, are you noticing more games being developed for smartphones?
With Square-Enix's annoucement of moving towards social media and handheld games, IREM's pending shutdown (/cry), Capcom's Megaman 3DS cancellation, and lackuster 3DS sales, is the industry moving away from the comfy couch?
Taking this further, will we see fewer console hardware and AAA console game releases in the future?

It will take a little longer for consoles but with my eyes I will watch the death of the games console.

They will further evolve into "home entertainment boxes" like we've already seen with Live and PSN, Hulu, Netflix, Skype coming soon, Kinect integration, all that jazz. They will open up lots of new ways of making money outside of selling video games.

Im no where near as informed as him but in my opinion i dont really see $1 games hurting full budgets games nearly as much as he is making out.

Iv found maybe 5 or 6 iOS games that actually have me wanting to play them but even then the something like gears 3 beats them down in every catagory, maybe im not the market he is talking about i frequently find more than 30 mins a day to game but even in scenarios where i only find 30 mins id much rather jump on halo for a game or two than play something like angry birds or SF4 Volt.

These games i deem as travel games, if im away from the ability to play a full game ill waste some time on a $1 game.

Essentially, the game is cheap up front, but you get lots of microtransaction that make money later.

It makes them less "$1 games" and more "$1 entry games".

As for ROI figures, sadly we lack good data on that so far.

The microtransaction model definitely helps make a more compelling business case.

But yeah, for a segment of the gaming industry that gets talked about so often in the media (gaming or otherwise), there's a lot of very specific data that there doesn't seem to be a lot of. It's always in broad strokes.

What is the average team size? What's the average salary compared to other segments of the industry? For as many successes as there are, how many developers fail to make any meaningful income?

The games media and journalists (especially American) are so focused on the consoles that they aren't really picking up on the success of the Smartphones and the PC.

By the end of the upcoming next generation, what are traditionally considered "gaming consoles" will no longer exist. They will be entertainment centers which stream video, play movies, work as a cable box, and have access to DD game stores. Traditional controllers will not be bundled in, they will be an optional, separate accessory.

Ironic. There has been so much talk over the past five years about a few big franchises/publishers pushing out "the little guy"; now "the big guy's" worried about $0.99 apps. Long live mom-and-pops!

In all seriousness, though, there's a simple solution I'm sure big publishers are already working on: squeezing the little guy out again by making the point of entry for IOS/Android publication steeper. They'll figure a way to fuck the indies somehow; they always do.

I have not really seen any stats that show that pc gaming is really growing...

Every year PC gaming alliance posts stats. They include MMOs, F2P games like Vindictus, not only retail US sales about which people seem to care too much. And according to these stats PC gaming is growing thanks to Asia and Europe + Steam.

The ROI is negative for the average iOS game. If your app isn't in the top 400 or so for a significant period of time, you're not going to make money.

Penetrating the market does seem to be a huge issue. And there's only so much you can do in terms of, say, designing the store to best promote a wide range of content. Plus the low initial cost of purchase makes people less likely to read reviews.

Actually, it'd be interesting to consider the affect of the smartphone gaming market on gaming media. In terms of how relevent it is.

I don't know if I can attribute it to smart phone gaming, but lately, I'm much less likely to buy a game at full price than I was a couple of years ago.

It is my belief that the poor US economy is having an effect, and companies are spinning the collective heads, looking for any way generate income, and the smartphone/pad hasn't really been tapped yet.
IMHO, the buy in price is too high for the end user, but I guess it's a wait and see sort of thing.

I think this vision is possible and maybe even likely. But I would seriously stop playing. Everything would be hugely downgraded.

I know the "Jack of all trades, master of none." meme, but... Why? Why would it be a downgrade for gaming to be one of many things a platform can do? This is how it's always been for PC, and it hasn't been "hugely downgraded" compared to dedicated devices. If anything, it's managed to outdo them in some ways by being a more open platform that doesn't shut the door on potential developers because some exec thinks that a particular idea will never sell.

By the end of the upcoming next generation, what are traditionally considered "gaming consoles" will no longer exist. They will be entertainment centers which stream video, play movies, work as a cable box, and have access to DD game stores. Traditional controllers will not be bundled in, they will be an optional, separate accessory.

I disagree. I think the infrastructure in the US can't support that at the moment. There are so many countries and potential markets that they miss out by going purely streaming. The world isn't ready yet. Segments of the US and Korea/Japan may be ready, but not the world.

I play videogames for escapism, and I much prefer the higher production values of the $60 games. I don't buy "apps" because they're disposable.

What publishers DO NEED to do is spread their $60 releases over the entire 12 months of the year instead of shitting 12 AAA games out within a 3 month period.

I would have thought it's more appropriate for developers to have a suite of titles that target a range of price points and appropriate platforms, rather than putting all their eggs in one basket, as it were.

I agree w/ him. I play Angry Birds on my iPod touch, I much prefer having my phone just call and text so I only have to charge it once every 3 days. I don't know what I'm going to do when I have to get a new phone >_<

I don't think that will be a real issue until the Xperia play catches on.

It's really hard to have complex console-like games on a mobile with only touchscreens and motion contols. No shoulder buttons, no analoges(fuck that virtual shit) and no tatical feedback.

I try my hardest to play more complex touch games, But it's too frustrating to play. There was a dual stick shooter on android, it was really good, but hot-dam, it was awful to contorl. virtual analoges are a pain to work with.

A race to the bottom. That anyone thinks a $1 market of electronic entertainment that is just filled with rubbish far faster than the Atari crash of decades past is a sustainable one is a joke. And now the big boys are beginning to realise they're cutting into their other operations by bigging up this particular time-sink, and chaining themselves to a crapshoot where a bedroom dev could win the multi-millionair coin toss, a wake-up call is hopefully imminent.